HD-DVD Really Pushing 360 Hardware

Microsoft says Gears of War's the only game that comes close. The reason backwards compatibility became such a challenging issue for Microsoft on Xbox 360 was because of approaches to hardware design. There was no way to incorporate Xbox components into the machine, so software emulation became the only viable route and one that takes time to implement. With HD-DVD, Microsoft's forced into taking a similar approach.

Ah, I wondered if that was how this add-on worked. It's simiilar to the PS3's BR drive, in that they both decode the streams via their CPU/Cell rather than rely on a hardware decoder as in the case of stand-alone units.

Makes sense, especially if you have the processing power. It's more cost-effective, and probably allows for future expandability.